Taubman sells 7 malls to Starwood Capital Group for $1.4 billion

Publish Date: June 18, 2014

An affiliate of Starwood Capital Group announced plans to purchase a portfolio of seven malls from Taubman Centers for $1.405 billion. The portfolio is made up of MacArthur Center, in Norfolk, Va.; Stony Point Fashion Park, in Richmond, Va.; Northlake Mall, in Charlotte, N.C.; The Mall at Wellington Green, in Wellington, Fla., The Shops at Willow Bend, in Plano, Tex.; The Mall at Partridge Creek, in Clinton Township, Mich.; and Fairlane Town Center, in Dearborn, Mich.

The price includes $785 million in cash and the assumption of $620 million of property-level debt that will be repaid or assumed at closing by the buyer. Taubman's share of cash and property level debt are expected to be $765 million and $595 million, respectively.

"Given today's investor interest in high quality regional malls, we have taken advantage of the opportunity to further enhance our growth and valuation, while increasing our industry leading productivity and modestly reducing the size of our base," said Robert S. Taubman, chairman, president and CEO of Taubman Centers, in a press release. "As a result of these sale transactions, the company's development and redevelopment pipeline will have an even greater impact on our growth."

Taubman Centers currently owns, leases and/or manages 27 retail properties in 15 states and South Korea. Its portfolio of 24 owned shopping centers is the most productive in the U.S. publicly traded regional mall industry. The company reported mall tenant sales per square foot of $721 in 2013 and upon completion of these transactions, expects its mall tenant sales to increase by more than $100 per square foot. "The seven centers we are selling are strong properties that fit well within the Starwood portfolio and will continue to thrive under their management," Taubman said.

"This acquisition is highly strategic for Starwood and its retail operating platform, Starwood Retail Partners," said Barry Sternlicht, chairman CEO of Starwood Capital Group, in a press release. "These assets will expand SRP's retail portfolio to 28 properties totaling 26.8 million square feet across 15 states. The Taubman portfolio broadens our relationships with higher end department stores and in line tenants and gives us an excellent opportunity to continue to produce attractive returns for our investors."

SRP, based in Chicago, was formed by Starwood to manage, lease and redevelop retail real estate assets across the regional mall, lifestyle and power center sectors in order to maximize property cash flow and long-term value.